TMI Blog2018 (8) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ny credit in the books of accounts, even by way of allotment of shares; for which no satisfactory explanation is offered, to be liable to income-tax. Clause (viib) of Section 56(2) is triggered at the stage of computation of income itself when the share application money received, from a resident, by a Company, in which the public are not substantially interested; is above the face value. Then the aggregate consideration received for the shares as exceeds the fair market value will be included as income from other sources. When the resident investor is not able to explain the nature and source for the credit seen in the books of accounts of the Company or the explanation offered is not satisfactory then the entire credit would be charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares at a premium above the face value. The appellant did not offer any amount so received as income for the purpose of taxation under the Income-tax Act. A notice under Section 143(2) was issued and the appellant is said to have disclosed the genuineness of the persons, who purchased the said shares on a premium. The Assessing Officer then attempted to tax the amounts so received under Section 56(2)(viib) of the Income Tax Act, 1961 [for brevity, the Act]. 2. The appellant/assessee contended before the learned Single Judge that the notice issued was only with respect to the source from which the funds were received and the same having been disclosed, there was no scope for a further proceeding, especially under Section 56(2)(viib) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- ( a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and ( b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of Section 10. 6. Section 68 of the Act as it stood before 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher; ( b) venture capital company , venture capital fund and venture capital undertaking shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10. 7. Section 68 of the Act as it earlier stood enabled the assessee to offer an explanation for any sum credited in the books of accounts which if found unsatisfactory will be charged to income tax. By the introduction of the proviso the explanation offered for the amounts received, inter alia as share application money, by a Company, not being one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stage of computation of income itself when the share application money received, from a resident, by a Company, in which the public are not substantially interested; is above the face value. Then the aggregate consideration received for the shares as exceeds the fair market value will be included as income from other sources. However, when the resident investor is not able to explain the nature and source for the credit seen in the books of accounts of the Company or the explanation offered is not satisfactory then the entire credit would be charged to income tax for that previous year. That is the entire amounts credited in the books of accounts, styled as, for allotment of shares or application money, including the fair market value d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy of Courts and adjudicatory authorities and would not be a proper exercise to be carried out by a Division Bench in appeal. The appellate powers, according to us, is not a weapon to obliterate a perfectly legal and reasonable construction given to the provisions in a statute by a learned Single Judge. The assessee sought to by-pass the statutory remedies, to approach this Court under Article 226; the jurisdiction under which is circumscribed as held in ([M/s.State of H.P. v. Gujarat Ambuja Cement Ltd. (2005) 6 SCC 499)] . Having opted to challenge the order on the ground raised of a proceeding totally without jurisdiction; when it is answered against the assessee, then they cannot seek the luxury of a fresh consideration on the very sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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